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Playing Politics With Pensions

chicken_little-sky-is-fallingNot much has been happening lately in our town Tustin. The hallowed halls of the city were originally scheduled to be dark for the next few weeks. That is, until the city council, who cancelled a regular meeting for July and then rescheduled for tonight, July 24, 2013. The only items on the agenda are the awarding of a contract for a storm drainage project and a closed item session (which we would bet is the real pressing issue) to discuss negotiations for real property that looks to be on the MCAS. We’ll have to see if they can manage to get the video up after the meeting. They had a bit of trouble (again) for the last meeting and we are not sure if it ever did get posted.

It doesn’t take a video to determine the level of corruption and inept governing by this bunch however. One simply has to look around at the obvious cronyism and corruption that is considered “good government” by our conservative city council.

One item on the last agenda was the acceptance of the contract for the last of the city employee unions, Tustin Municipal Employees Association. As we have told you before, management of the association is actually contracted to the Orange County Employees Association, a public employee union that handles the contract affairs for about 17,000 city, county and special district employees in the county.

Among the provisions of the TMEA contract is one that should send shivers up the spines of any rank-and-file worker. As part of the deal, the TMEA has agreed to pay the full employee cost of pensions. That in itself is long overdue and we agree that it is about time all employees, including management and executives, pay their fair share of pension costs as determined by their respective pension plans (in this case, CalPers).

What is scary is that city negotiators have managed to eke out another provision that will eventually go into effect. This is a requirement by employees to pay a portion of the employer’s cost of pensions. The initial three percent does not sound like much but it opens the door pension critics have long awaited. If three percent today, then how much next year? Fortunately for the city’s employees, they will get a breather next year as their contract is for two years.

What makes this situation worse is the blatant disregard for employees the city council had when they not only gave Chief Scott Jordan a raise last year, ostensibly to keep him here, but also another five percent raise as a going away present on the eve of his departure from the city employment ranks. Then, they turned around and cried pending insolvency if the employees didn’t rolll over on their pension demands. The contract, by the way, was narrowly approved indicating that nearly half the employees were not happy with the provisions.

Nick Berardino, General Manager of OCEA, recently published a guest article in the Orange County Register:

On July 6 the Orange County Register published a story highlighting excessive pension benefits for public employees, this time focused on executives and managers in the “$100K pension club.”

Ultimately, that story, helps to explain why we continue to be bombarded with stories about this issue, even after Governor Brown has signed into law sweeping pension reforms and after public employees across the state have agreed to significant additional reforms.

What continues to be missed is a consequence of the fact that some politicians understand the public employee pension issue resonates with the public. So, in order to keep the issue in the forefront, those politicians have an interest in creating doomsday scenarios and making the cost of pensions to taxpayers as high as possible.

And I believer that is what is happening at the Orange County Employees Retirement System, or OCERS, which administers pension benefits for the County, the Fire Authority and many cities and special districts [not Tustin, who is administered by CalPers-ed.] in Orange County.

Over the past year the OCERS trustees – some of whom actively bash pensions in public and belong to aggressively anti-public employee organizations – have taken one action after another to artificially drive up the cost of pension benefits.

This isn’t about “facing reality” or “not kicking the can down the road” or “inter-generational equity.” It’s about furthering a radical political agenda. And the sickest part of the scheme?

They are funding it with your taxpayer dollars and it’s you who are paying for it. You should also know some legitimate facts that are repeatedly left out of the news stories and editorials.

First, county employees represented by the Orange County Employees Association pay 100 percent of their pension costs and they pay the entire cost to the county of the 2004 improvement to a 2.7 percent at 55 year old formula.

Second, county employees do not receive Social Security benefits. Third, the average pension for OCEA member retirees is $33,000 per year. That’s a long way from the “$100,000Club” referenced in the Register’s story.

Nick, a good friend of ours, goes on to point out the fact that it is employees, not the politicians, who have been at the forefront of pension reform. Some of those reforms at the county level have included being the first employee organization to require 100 percent contributions for pensions as well as developing (despite what the politicians may say) the first hybrid plan that includes a lesser defined benefit combined with a 401(k) style component to allow for lower cost and better management of employee benefits.

What politicians are now doing, to fortify their “sky is falling” fiction, is to artificially manipulate pension numbers to make it appear as if their is a crisis when their isn’t. For example, OCERS just recently lowered the Assumption Rate, the expected rate of return on investment for the fund, by a quarter percent from 7.5 to 7.25. This, even though the market is recoverning nicely and the fund has been posting record returns for the past several years with no indication it will falter. This not only raises the employee’s pension costs by another 6.5 percent in the next two years, it also costs the taxpayer in the form of employer paid costs mandated by law. So, who is the real loser?

Tustin, as a member of CalPers, has also benefited from record gains made in their pension system. In a recent press release, CalPers stated a return on investment for the past year of 12.5 percent on an Assumption Rate of 7.5 percent. Tustin City Council and their corrupt city manager, Jeff Parker, knew this as they were negotiating the new contract. Lamenting their supposed fiscal woes at the negotiation table, the employees apparently bought it hook, line and sinker.

Like many public employees, city of Tustin workers have mostly gone without raises over the past few years due, mostly, to the economy. I say most of them, because the Tustin City Council and City Manager Jeff Parker have managed to reward executives and senior managers, all unrepresented, with lucrative raises by manipulating the system to their benefit. In the so-called open government of Tustin, managers have been given new titles and old positions eliminated, supposedly with the eye toward saving the city money. In reality, we suspect many of these so-called new titles are simply ways to reward long term senior employees while hiding the truth from a gullible rank-and-file. The only question at this point is whether the Tustin City Council is complicit or being sold a bill of goods by a conniving city management team.

Where’s The Leadership?

Council view of Jeff Parker's 21st Century Hiring Process

Council view of Jeff Parker’s 21st Century Hiring Process

Suffice it to say, the water in Tustin may taste terrible but it is healthy, according to the Public Health Goals 2010-2012 report as presented at the July 2nd Tustin City Council meeting by Water Services Manager, Art Valenzuela.

It seems we aren’t the only ones who are unhappy with the five percent raise being considered for Police Chief Scott Jordan during this session. Councilmember Beckie Gomez pointed out that, last year, Jordan received a five percent raise that was supposedly for a two year period. She let the cat out of the bag (sorry it took so long to get to this) and said the chief, in spite of the raise that was supposed to keep him here, has now chosen to leave the city.

Huh?

So, the city decided to give him a parting gift of another five percent raise….. for what? Gomez, as the only true fiscally responsible person sitting ont he dais, pointed out the absurdity of this. Saying that her comments were not about his work performance, she said the raise reflects a ten percent raise in less than a year. “I think it would be inappropriate to add another five percent because that would be ten percent in just over a year, and that’s not what we’ve done in respect with our other employees.”

Gomez made a motion to bifurcate the item in order to vote separately on Jordan’s raise. Surprisingly, Councilmember John Nielsen provided the second for Gomez’ motion. Now, here is where it gets interesting.

First, Gomez had to explain the motion to the Podiatrist Councilman because he has trouble understanding anything that isn’t drawn in pictures. They also had to wake up Chuck so he could vote with the block. I’m not sure if Nielsen was just being nice or if he really agreed with Beckie on this one. In any case, Nielsen and Gomez were the only votes in favor of deciding these issues separately.

In a moment of absurdity, Councilmember Chuck Puckett showed his ignorance in moving the entire item saying, “We have an excellent city manager and city police chief.” Yes, Chuck, we did until the police chief decided to leave. So, where does it make sense to give him a parting gift of 5 percent? And, where was the public discussion of the proposed raises for the deputy city manager and the departing chief? Apparently, that is not part of the open government plan in the City of Tustin. Of course, that doesn’t matter to Puckett who, again, showed he either doesn’t read the material presented or he doesn’t care when he thought they were discussing the city manager when, in fact, the proposal included the Deputy City Manager.

The other item we would like to have seen called out by Gomez was subitem 3 of item 6 that further cements Parker’s ability to abridge employment hiring rules at his discretion. However, the item was pointed out to the city employee’s union and they were not concerned either. Good luck when new hires are no longer represented by the union.

The final items on the agenda were the agreements with the unions representing the Tustin Police Officers, Police Management and the Police Support Services. The union representing the rank and file employees in the city, Tustin Municipal Employees Association, have reached impasse (although the city won’t admit it) and talks have been suspended as far as we know. Apparently, they are the only ones ticked off about the shenanigans between the corrupt city council and the executive managers over their incentive pay.

Although no one is talking the sticking point, we think, may be the city’s desire to accelerate the increased payments by employees to pay their full share of the cost of their pensions. Previously, they had agreed to a timetable for coming to full payment. But the city, impressed by non-existent data that puts the city at risk for pensions, asked for employees to pay their full share beginning this year. Of course, this is without the benefit of a raise to offset the cost, such as Chief Jordan received last year and Deputy City Manager Charles Robinson will receive just as soon as Parker can sign the papers. And, don’t forget, now that Parker has full authority, he does not need to notify the city council or anyone else about Robinson’s raise.

To their credit, the city will increase the Flexible Benefits payments in the second year. However, with the expected increase in costs for healthcare, this is probably a wash.

Regardless of the kudos the city council lavished on the staff and employees for coming to resolution, don’t expect the TMEA to roll over any time soon. My sources tell me they are prepared to sit it out as long as necessary. They are not happy about the lack of leadership shown by the conservative council who continue to lavish raises and benefits on executive and mangerial employees while ignoring the rank and file. This council meeting showed their continued disdain for employees in the city and for labor in general.

On The City Council Agenda, July 2, 2013

transparent governmentAfter eight days on the road, it is good to be home. New Mexico and my brother send their felicitations. The road was (mostly) smooth and the temperatures hot as Julie and I traversed Arizona and New Mexico searching for the lost remnants of the mother road, Route 66. We found and rode quite a bit of it and you can read about our adventures here. Give me some time to catch up and post some pictures as well. Eventually, we’ll have the whole, sordid story posted. Now, on to the politics of the day…

The highlight of the upcoming Tustin City Council meeting is the agreement of the police and police support unions to new contracts. Also up for a vote in the regular session are amendments to the Deputy City Manager and the Chief of Police employment contracts. Both positions will begin paying additional contributions toward their retirement in CALPERS. Unfortunately, the city manager has seen fit to adjust the salaries of both to cover the added cost of the contributions by adding a top step to their respective salary ranges. This, in effect, gives Chief Jordan a total of a 10% salary increase over the past year as he was previously given a sham 5% raise supposedly to keep him from taking employment elsewhere. The contracts are a win-win for both executives as the Tustin taxpayer, once again, gets the shaft. Just another example of the Republican giving to Republican cronies, letting the public pay.

Not leaving himself out of the Tustin City Gravy Train, City Manager Jeff Parker has decided to further consolidate his power base by “clarifying” idi amin parkerhis hire/fire authority and ability to adjust the salaries of any employee (particularly his executive cronies) without need to bring it into public light by having the city council authorize it. Understand,this goes far beyond the normal merit raise system. Remember the new step in Deputy City Manager Charles Robinson’s pay scale the council is being asked to approve? He doesn’t get it right away. But, under this particular move, Parker is left open to “adjust” Robinson’s pay anytime he desires after the city council approves this resolution. We suspect it will take about a week before Parker “awards” a $22,000 pay raise to Robinson.

Parker, in the same breath, also claims there was an “error” in the calculation of the original number of leave hours for Robinson when he was hired. He now wishes to rectify that through resolution. However, if the original calculation was truly in error, why would Parker need council authority to fix it now? Hopefully, someone on the city council will question this, and all of these issues, and -hopefully- in open session rather than behind closed doors.

Oh, and by the way, Parker, through the city attorney, has recommended himself for a raise of nearly five thousand dollars a year to offset his increased pension payments as well as a one-time payment of $24,000 to reward him for settling contracts with the “majority of the city’s represented employee groups (except the largest, TMEA, which they have reached impasse). He further justifies this through his constructive firing of former city PIO, Lisa Woolery, and ostensibly taking on those added duties. Parker will also receive increased health and welfare benefits.

It seems that Tustin Municipal Employees Association chief negotiator, Frank Flavin, is on to their tricks as I am told the TMEA and the city have declared an impasse in negotiations for the rank and file employee. Rank and file employees, along with the public safety unions, previously stepped up to the plate and began contributing more to their pensions last year. To my knowledge, not one union member has received a raise while virtually all senior and executive managers have received substantial increases in pay and benefits. This is the typical haves/havenots form of perverted leadership that Republicans in Orange County have shown from the highest ranks of the county. And, unfortunately, the Tustin City Council is either asleep at the wheel or decisively ignorant of what is going on around them. So, don’t expect Chuck Puckett or the Podiatrist Councilman to do more than hide their head in the sand and vote yes. We wonder if Beckie Gomez isn’t now wishing she had shown stronger support for Worley-Hagen and Waldram, both of whom supported true open government.

Closed Session

Conference with Legal Council – Two Items each, Initiation of and Exposure to Litigation.

Public Employee Performance Evaluation – City Manager & City Attorney.

Labor Negotiation – All union represented and unrepresented employees.

Conference with Real Property Negotiators – Two issues, including the Army Reserve Base located on Barranca Parkway adjacent to the District.

Public Hearing

Public Health Goals 2010-3012 Report – Report and Hearing on the health of the water supplied to customers.

Consent Calendar

Approve Agreement for Information Technology Services Network Infrastructure – upgrade of computer and VOIP services in city buildings and maintenance contract with Govplace.

Declaration of Surplus Property – Assorted computer equipment.

Amendments to Deputy City Manager and Police Chief Employment Agreements – Amends contracts to provide additional compensation and leave hours in the case of the deputy city manager.

Amendment to the City Manager Employment Agreement – Increases city manager’s pay by 5%, increases employee retirement contributions, increases health & welfare benefits.

Regular Business

Resolutions Regarding Memoranda of Understanding – TPOA, TPSSA, TPMA (public safety unions) Approval of 2-year MOUs making changes to compensation by adding an additional salary step and accelerating increased employee contributions to pensions.

Salary Resolutions for Unrepresented Executive Management, Supervisory and Confidential Employees – Eliminates employer paid pension contributions of members, adds step to salary range resulting in increase of $324K in employee costs for management.

On The City Council Agenda – June 4, 2013

agendaSorry for the late writeup of the city clown – uh, council agenda. I’m on vacation for the month and articles may be a bit spotty. I’ll do my best to keep you updated.

Depending on the pontifications of our glorious leaders, the city council meeting should be a couple of hours due mostly to two publich hearings. Prior to that is a presentations to SOCAL Water Polo. I admit, I am a fan and we have a great team at Foothill.

The Closed Session, I am sure, will be dominated by discussions over the pending labor contracts. I understand the city is holding fast on monetary issues. I doubt the union is letting them forget the raise given to Chief Jordan and the raises-by-change-in -title of other mid and high level ranking managers over the past year. All of the unions, including TPOA, worked with the city to reduce pension costs. However, rumour has it, they are looking to get as much up front as they can to pay their obligations. Don’t expect the city council to do anything other than rubberstamp the city manager’s recommendation.

Speaking of, City Manager Jeff Parker will be discussed tonight as his performance evaluation is on the list. I’m sure our city council will speak glowingly of him. The fact is, he has spent most of his tenure consolidating his power and creating allies. His recent move to abolish the pesky hiring process in favor of one that makes it easier to hire his friends and cronies was a major coup for Jeff. It should be interesting to see how many high level managers will be hired under his “21st Century hiring process” over the next year.

Public Hearing Item 1 is a levy on the lighting facilities district that comes up every year. Unfortunately, there was a glitch that did not give adequate time to publish the hearing according to the law. They are recommending a new date be set for the next city council meeting on June 18th. It’s unclear whether they will hear any testimony tonight but the resolution states any protests to the levy must be made in writing. Interesting to note Parker is also calling himself the ex-officio city clerk. I guess he hasn’t found an adequate crony to hire yet.

Public Hearing Item 2 is a much less forward way to lob city obligations onto an unsuspecting public. This time, the city is targeting the first time homebuyer.

When RDAs were abolished by the state Tustin, like other entities, scrambled for every way they could to make up the difference in lost funding (we are still trying to justify lost funding for something that should never have happened to begin with). The latest ploy takes a jab at low income, first time homeowners who bought property under the city’s program. In addition to the usual costs of refinancing a home purchased under the program, city staff are recommending Tustin become only the third city to charge a fee for processing the paperwork. By their own admission, most cities in The Real OC do not charge the “subordination fee”. In fact, Tustin had to reach out as far as Fresno to find a “comparable” city.

Understanding that our city fathers, sans Beckie, are made up of well-to-do Republicans who take a dim view of the riff-raff in housing authority property, this travesty will, in all likelihood slap our new homeowners in the face. One has to wonder if anyone will show up to decry this deplorable act. Certainly, the city council as a body could gain some points here if they were to turn this down. But, don’t hold your breath.

Consent Calendar Item 5 is approval of an agreement to transfer equipment from the Municipal Water Disctrict of Orange County to the city. Money for the 2,000 gallon potable water trailer comes from a grant under the Urban Area Security Initiative and will be used for disaster services. It is a pretty straightforward arrangement and I am not sure why it required an 87 page staff report for justification. Oh, wait… that’s because the contract is 84 pages long. And, you wanted to know why California taxes are so high.

Items 6 and 7 are to approve plans and specifications for revamping the intersection at Enderle and Vandenberg, as well as reconstructing the bike trail along Newport Avenue. The latter is welcome even though the current trail is in very good condition. It would be nice to see an extension of this trail in both directions. Construction of the bike trail is scheduled to begin in August and be completed in two months.

The only Regular Business on the agenda is an item amending the Disposition and Development Agreement between Irvine Company’s Legacy Villas and the city. The only change is to require Legacy Villas to pay the backbone infrastructure fees up front.

That’s it for tonight’s city council meeting. We would attend but we will be at our daughter’s last choir concert for her high school singing career, cheering her on. There is no doubt the sounds of the choir are preferable to the caterwauling to be heard in city council chambers.